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Finland's Parliament Approves Greek Bailout

Greece may have moved a bit further away from default after Finland's Parliament approved the latest Greek bailout plan. The Finnish parliament easily passed the bailout measure with a 111-72 vote, which followed successful votes to approve the Greek rescue package earlier this week by the German and Dutch parliaments .

The 130 billion euro ($175 billion) bailout is desperately needed by Greece in order for the country to avoid a default on its sovereign debt. However, there is growing resistance in countries like Finland, Germany and the Netherlands to repeated bailouts of Greece.

Finland's government was able to overcome opposition to the bailout by reaching a deal with Greece last week in which the the Greek government gave Finland collateral for its 2.3 billion euro contribution to the latest Greek bailout. Finland was also one of the countries that forced the Greek government to agree to unprecedented measures in order to receive another bailout.

Last week, euro zone finance ministers were able to get Greece to agree to external over site of its finances. The finance ministers also said that Greece must pass a law to make paying its creditors have precedence over paying the Greek government's own workers. Although the measures are unpopular among a Greek populace that sees its government losing some of its independence to outsiders, they played a crucial role in winning support of the bailout from countries like Finland that have grown increasingly wary of the Greeks' negotiating tactics and failure to live up to past promises.

Investors should take note that Finnish approval of the Greek bailout still isn't guaranteed. The approval of the measure by the Finnish Parliament simply gives the government permission to negotiate and agree to a deal at a meeting of European leaders later this week.

If the Greek government hasn't come though on promises made at the last meeting of euro zone finance ministers, Finland could still move to block Greece from receiving any more aid. Any such move could lead directly to a Greek default so it would seem that the euro zone leaders will work out a deal with the troubled country. However, there have been a number of remarks from European leaders saying that Europe is now much more capable of dealing with a Greek default and that the fallout from a default wouldn't be as severe now as it would have been just a year ago.

Although it's more than likely that Greece will get its bailout, it's certainly not guaranteed, so investors should watch the situation closely.

ACTION ITEMS:

Bullish:Traders who believe that the successful vote in Finland will lead to a Greek bailout might want to consider the following trades:

The CurrencyShares Euro Trust (NYSE: FXE) could move higher if Greece gets its bailout package. Most observors agree that this will happen because the euro zone still has a lot at stake if Greece defaults.

European banks like Barclays (NYSE: BCS), Banco Santander (NYSE: STD) and Credit Suisse (NYSE: CS) could also move higher if they are less likely to experience losses related to a Greek default.

Bearish:Traders who believe that Greece will default eventually even if it receives another bailout package may consider alternative positions:

The ProShares UltraShort MSCI Europe (NYSE: EPV) and the CurrencyShares Japanese Yen Trust (NYSE: FXY) ETFs could both benefit from a Greek default that weakens the euro zone economies and strengthens the yen as traders ditch the euro.

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